Modifié 4 mars 2019 à 22 h 48
Quoting: tesau315
What do you mean it doesn't hold up? And you honestly think Karlsson won't want more than Doughty? And Stammer and Hedman took less because Yzerman is a great salesman, and was able to sell team success over personal gain to them.
Yes I honestly think Karlsson is searching for a cup contender where he'd enjoy playing, before he looks for a possible extra mil elsewhere. It wasn't just Yzerman... Location, cup contenders, low tax rate were all factors.
Answer these questions for me regarding this "tax treaty loophole claim". BTW, the quotes in my questions are from the article.
1. Why does the article use his first-year salary of 15.9m rather than his 11.634m cap hit? (makes "running some quick numbers" very confusing)
2. Why does the article LIE about the percent of games Matthews plays in Canada?? "(A quick glance at the team's schedule tell us this amounts to approximately 73 per cent of players' salaries.)"
I counted myself and the Leafs play 33 times in the U.S. this season. 59.7%. NOT 73%... They plug in 73% for all their "numbers" examples, which immediately is incorrect info and makes me want to stop reading any further into this sketchy article... But I continued reading and continued to find more BS.
3. "Why is residency important? Sticking with the Maple Leafs example, players who are residents of either Canada or the United States are taxed on their entire salary in their home country."
If this is so, what about players that are residents in Sweden, Finland, Russia, or other foreign countries? How do those players get taxed?
4. "Those who are considered residents of the U.S. must also pay tax in Canada – but only to the extent of time on Canadian soil."
Matthews is an example, "he plays 73% of his games in Canada" (which is a LIE, he plays 59.7% in CA). How is he getting taxed less if he plays majority of games in the highest tax rate region?
5. "A signing bonus is defined as a sum of money paid to an employee as an enticement or incentive to join a particular organization or sign a new contract."
If that's so, how is his signing bonus BUILT INTO his cap hit? 93.7& of his $58,170,000 is in signing bonuses... That's not an incentive, that's receiving your cap hit in other methods than base salary. If the quote is legit, signing bonuses would be in addition of the cap hit... Ex: getting a 1m signing bonus in addition to a 5m cap hit contract (6m total), would be incentive to pick that deal over a 5m cap hit w/o 1m bonus.
6. "The treaty provides that a signing bonus paid by a Canadian NHL team to a U.S.-resident player would be taxable in Canada – but that tax may not exceed 15 per cent of the gross amount of the payment."
Who ends up paying the taxes that Matthews avoided? The Canadian Government? Taxes don't just "disappear".
7. "Assuming the player's U.S. tax rate exceeds 15 per cent (it does, remember the 37-50 per cent), the bonus would effectively be taxable at a combined rate equal to his normal U.S. rates. And so, there is no Canadian tax cost disadvantage on the signing bonus amount."
Wtf is a "combined rate equal to his normal U.S. rates"? What are we combining? The bonus rate (15%)? If that's the case, how can you combine that rate with the normal U.S. rates (37-51%) and expect to get the same normal U.S. rate? If you combine the rates, you'd get a 51-66% U.S. tax rate. Which IS NOT "equal to his normal U.S. rates".
8. Since all the "numbers examples" that the article uses are falsely skewed... Let me make my own example with REAL analytics, that maintains the same "tax treaty claim" rules...
Matthews cap hit is 11.634m (fact). If 93.7% of his salary is paid via "signing bonus" (10.9m), and he gets taxed 15% in CA (plays 49 games in CA), then 6.5m gets taxed in CA over this season (15% = 975k).
Since the article is unclear regarding "the bonus would effectively be taxable at a combined rate equal to his normal U.S. rates" (LOL wut), I'll assume they mean that U.S. tax rates stay the same.
In this case, since 6.5m got taxed in his 49 CA games, that leaves 4.4m to be taxed in his 33 U.S. games. Based on the tax rates of where his 33 U.S. games take place @, the average tax rate is 43.31% (43.31% = 1.905m). Add that to the 975k and you get 2.88m.
Now for the base salary (735k). We know this number is getting taxed @ the real NHL tax rates. Since 41 games are in Toronto (53.09%) & 33 in the U.S (43.31%), the remaining 8 CA games tax rates avg is 50.87%. Altogether, the average of those 3 tax rates (with the 41/33/8 factor included) is 48.94% (48.94% = 360k). Add the 360k to the 2.88m.
So, according to my math Matthew's would pay roughly 3.24m in taxes AAV, and he'd pocket 8.394m in post-tax earnings. This is better than the 5.444m (post tax earnings) that the tax calculator shows, & it's also better than Tampa's post tax earnings (7.364m) when calculating the same 11.634m cap hit.
9. If we do the same math for his 15.9m first-year salary, 15.91m x .597 (CA game rate) x .15 (signing bonus tax %) = 1.425m in CA taxes paid.
Now U.S. taxes:....................................................................... 15.91m x .403 (US game rate) x .4331 (US tax % avg) = 2.777m in U.S. taxes paid.
Now 700k base salary taxes:................................................. 700k x .4894 (avg tax rate) = 343k
Add those up and you get 4.545m paid in taxes his first year... Not 2.5m like the article claims...
SOOOO bottom line is this: Clearly the math was completely incorrect from the article. But regardless, after doing my own math... The "tax treaty claim" does indeed leave Matthews with less taxes paid than the tax calculators will show... But my first 7 questions are legit and need answers in order for this whole "claim" to even be possible.
Evidence for this claim being true:
My own personal math example (if it correctly follows the rules of the treaty), does show less taxes being paid by Matthews.
Evidence for this claim being BS:
There is only 1 article I can find that talks about this.
That 1 article is full of contradictions.
The article is Canadian (biased).
The highest paid NHL players are on high tax rate teams... Coincidence?
At most, maybe 10% of people on Capfriendly have mentioned this claim. Why aren't more people aware?
Nobody in that 10% has been able to answer the questions I linked to the article.
etc................
LAST QUESTION: If this is true, what would stop U.S. teams from doing the same thing & start paying their players 90%+ in signing bonuses also? U.S. teams should be able to benefit even more than the article is suggesting CA teams are benefiting.